January 19, 2009 - Gary Tasman

I hate to report downbeat news, especially when it involves commercial real estate. But as my clients and loyal readers know, I’m not one to sugarcoat the truth. The truth is, this promises to be a difficult year for the commercial industry.

Based on the latest commercial stats, the short-term prognosis looks bleak in our market and the majority of markets nationwide, as well. According to some retail real estate industry experts, worse-than-expected holiday sales, combined with the tight credit market and recession, will likely result in more store closings and retailer bankruptcies in the next six months. Britt Beemer, president of Americas Research Group, identified the following retailers as the "biggest losers" of 2008's holiday shopping season: CVS, American Eagle, Macy's, Belk, Walgreens, Dillard's and The Sports Authority.

With nearly 5,100 store closings already identified by these retailers for this fiscal year (up 43% over total store closings in 2007, more are expected to trickle in as fourth quarter reports surface), resulting in an aggregate net loss of stores at these retail chains. According to a recent Costar report, the categories with the greatest number of net store closings in 2008 are: home accessories/furniture (-1,085 stores); electronics (-715 stores); and jewelry (-400 stores).

On the other hand, all is not lost. There are still sales and leases being negotiated. It’s just that some businesses and industries are likely to fare better than others in this economy, and therefore, are more likely to be relocating or expanding into new space. For example, grocers (namely Publix) and similar “necessity retailers” traditionally do well regardless of the economy. After all, people have to eat, even if they spend less on food. For my complete column, where I list other retailers and retail types that I predict will survive, if not thrive in, the current downturn...email me at: gary.tasman@cushwake.com and I will be happy to send you the entire article.

I appreciate your interest in my view of the world of commercial real estate and how it effects everyone...and please keep on reading my column. Thank you.